Do you want to transfer your cryptocurrency from exchange A to exchange B in cheapest possible way? I‘ll explain how I am doing this. In addition, I hope someone will read this and render a convenient tool to calculate this automatically.
First I‘ll list steps needed and then I‘ll give a real-life example with numbers.
Steps of finding cheapest transfer of crypto X between exchange A and exchange B:
- (Optional) Determine cost of direct transfer of crypto X to serve as a comparison.
- Determine trading fees of both exchanges A and B.
- Find and compare currency pair lists of both exchanges A and B. Find cheap altcoins (like DOGE, Music Coin, Myriad, etc.) present on both lists.
- Check if trading volume of this altcoin is sufficient for your transfer. If not, return to step two.
- Calculate transfer from exchange A to B via chosen cheap altcoins by summing the following:
- Fee to trade your cryptocurrency to cheap altcoin in exchange A.
- Fee to withdraw cheap altcoin from exchange A. Usually there are no deposit fees.
- Fee to trade cheap altcoin to your cryptocurrency in exchange B.
- (Optional) Repeat last step with few different cheap altcoins until you find cheapest transfer.
That is it! Now let us take a real-life example.
Real-life example
Let us say you have 0.01 BTC (current rate is 11000 USD/BTC, worth 110 USD) on Bittrex and you want to transfer bitcoin to Cryptopia.
- BTC withdrawal fee on Bittrex is 0.001 BTC (you can find it by going to Wallets and clicking minus sign next to Bitcoin). Cryptopia has no deposit fee. So direct transfer would cost 0.001 BTC (fee) * 110000 USD/BTC (rate) = 11 USD.
- Bittrex trading fee is 0.25%, Cryptopia trading fee is 0.2% (Google: bittrex trading fee).
- On https://coinmarketcap.com/exchanges you can select both exchanges and sort their currency pairs by currency price. I can see that both have Dogecoin listed and this coin is cheapest on Bittrex.
- Smallest trading volume on Cryptopia is more than 3000x larger than I want to transfer, so it is sufficient.
- Calculating transfer cost via Dogecoin (total is 0.275 + 0.0121 + 0.2194 = ca. 0.51 USD):
- Fee to trade BTC to Dogecoin on Bittrex 0.01 BTC * 0.0025 (fee) * 11000 (rate) = 0.275 USD
- Fee to withdraw Dogecoin from Bittrex to Cryptopia 2 DOGE (fee) * 0.006050 USD (DOGE rate) = 0.0121 USD
- Fee to trade Dogecoin to BTC on Cryptopia (0.01 BTC – 0.0000261 BTC (previous fees)) * 0.002 (fee) * 11000 (rate) = 0.2194 USD
As you can see, transfer via cheap altcoin costs ca. 0.51 USD and is over 20x times cheaper than direct transfer is.
IMPORTANT! Please mind that if cryptocurrency rate is extremely volatile at given moment, you may lose or gain a little bit more, because trading price on the exchange B will be different by the time your cheap altcoin is deposited.
I believe that in a near future, more trading companies will participate in the game and fees will go down.
I really hope so. Have lots of faith in Lightning network to reduce fees to minimum (also killing a lot of altcoins along the way).
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